Every year hundreds of new start-ups enter the business arena with much fanfare. But most of the new small businesses won’t be in the business this time next year. This is the cruel fact we have to accept before our businesses die. Here in this blog, I will be discussing the common business mistakes committed by new entrants and their possible remedies that work best.
According to a survey, 30 percent of the start-ups in their second year and about 50 percent of the firms in their first fifth year of the business dies. This is a serious problem and in most of the cases, it has been observed that the new entrants lack the basic business tone. Here I thought of identifying the problems and the remedial measures to take them out of the grave situation.
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1. Unrealistic Expectations:
The primary reason behind any business failure is the over expectations from a budding start-up. You cannot expect to flourish something overnight. To let your business grow, you need a minimum gestation period. This is often known to entrepreneurs, but they cannot afford to have the patience for a long time. This is either due to their scarcity of funds to carry the business for a longer time or they are in a hurry to make big bucks within a short span of time.
You need to have patience. Remember good things come late. Starting a business and make it a blockbuster within a short period requires less of efforts and more of lucks, which is not guaranteed. Be realistic. If you are more optimistic about your results, sooner you would get depressed.
2. Stop Learning:
Self-complacent is the killer of any business. This tendency is seen on a large number of business owners. They are overwhelmingly satisfied with their success and they stop acquiring fresh thoughts. This is common for the new business owners. After their initial success, they tend to go rigid and turn away from constructive criticism. They behave as if they know everything and hardly care about others’ advice.
As a new entrepreneur, you should know success is short-lived if you are averse to criticisms and suggestions. Try to learn from your previous mistakes, be adaptive to the changing environment. Remember, perpetual success comes from a continuous learning. Accumulate knowledge as far as possible, because learning and success are integrally related.
3. Unplanned Business:
There’s an old adage “Failing to plan is planning to fail”. That means if you haven’t planned your works, you cannot succeed. This perfectly fits in your business too. If you are a new entrant into the business and haven’t planned your things well, sooner or later you will drown in business failures and mistakes. It’s often seen that the budding businessmen devote less time to chalking plans rather believe in doing things out of impulsion. Though initially, it works but in a distant future, they find themselves in a mess.
As a business owner, you should pay equal importance to planning as well as execution. Segregate your entire business tasks into primary segments like Finance, Marketing, Operations etc. Designate eligible persons (including yourself) in-charge of the segments. Set your short-term and long-term goals for each segment as well as the whole organisation. Review them at a certain point and make necessary modifications as and when required.
4. Spending Money On Unneeded Accounts:
One major problem with new start-ups is that they can hardly prioritize works. As a result, they indulge themselves in some unnecessary expenditure which could have been avoided at the initial stages. Lack of business plan and ill-structured budget often create such a situation, where business owners can’t decide where to spend and where to save. Many new business owners spend money to woo investors with decorative offices and other luxurious amenities- mind it, such a camouflage would not work for your business. On many occasions, it has been witnessed that a business owner is left with less money or no money to spend on essential things of the business.
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To resist yourself from a spending debacle planning and budgeting is extremely important. It makes you aware of various expenditures and arranges the spending order on the basis of their priority. Spending abruptly is not the key to a business success, but spending the right amount at the right place makes the difference.
5. Poor After Sale Service:
A common business mistake committed by the new entrants is ignoring the existing customers. Yes, this is true. Most of the business fails because of the poor after sales service. After getting a formidable start, some of the new business owners take their existing customers for granted. If the businesses think their customer base is intact, even if they don’t provide quality after-sale services or ignoring the customer grievances, they might be affected by a wrong perception.
My advice, in this case, is straightforward. Before aggressing for new business, keep your old folks happy. Because if the existing customers are not happy with your services, your disrepute will drive away the new businesses too. Make a good rapport with your existing customers. Contact them at a fixed interval and take care of their grievances and problems. Wish them on special occasions like Birthdays, New Year, Festive seasons etc. This keeps you afresh in the customers’ mind.
6. Not Asking For Reference:
This is a minor yet common mistake done by the new entrepreneurs. Budding businesses struggle to invade markets, not because of poor advertisements or inefficient marketing, but not utilising their existing customer base as referrals to the new customers.
Use referrals as your prime marketing weapon. At the initial stages when you struggle to penetrate an existing market, a reference from your existing customers works best to attract new customers. This is the cheapest and the easiest way to grow your customer base.
7. No Plan For Social Media Marketing:
Although people nowadays aware of the impacts of social media, yet new owners are prone to make such business mistakes. Usually, it has been noticed that business owners are so involved with their core business activities, they find it hard to make out time for social media marketing. On the other hand, big business houses are recruiting people exclusively for managing business accounts on Facebook, Twitter, Google Plus etc. This is a very efficient way to popularise your brand.
Every business owner should engrave in his/her mind that without social media you cannot flourish. The days have done when you used to accumulate buyers by showing ads only on newspaper and television. In this digital age, social media has become an enormous marketing tool that can guide your business to the top.
8. Mental Bookkeeping:
New business owners are so busy with Operations and Marketing of the business, they normally forget to keep their accounts in a systematic manner. They are more in the habit of keeping accounts orally than writing it down in the books. At the initial stages when the transactions are very low somehow books can be manageable orally, but when the organisation grows the same habit persists. And ultimately the whole things get messed up.
Do your bookkeeping from the day one. If you are totally ignorant in this matter, learn it from an expert or various YouTube tutorials. Initially, the affairs can be manageable with the pen and paper, but with the gradual expansion of business activities, it is recommended that you should go for accounting software packages available in the market.
If you are serious about addressing the above points and abstain yourself from committing these common mistakes you can save a lot of money as well as time. They are crucial to the ongoing success of the business. At the initial stages, it often creates a problem for a business owner to tackle these issues, but later on, it becomes a habit.